PRACTICE EXERCISE #1

TRUE OR FALSE

1. Mutual entity is characterized as partnership having a juridical personality which can acquire, sell, or
dispose properties and incur obligations.
FALSE

2. The partner’s drawing account are shown in the statement of financial position.
FALSE

3. All forms of partnerships are taxable entities.

FALSE

4. The articles of co-partnership is a written contract between partners that specifies the name, location,
and nature of the business; the duties of each partner; and the method of sharing profits and losses
among the partners.
TRUE

5. Partners have the right to transfer ownership at will.

FALSE

6. The financial statements of a partnership are similar to the statements of a sole proprietorship.
TRUE

7. In a general partnership, if one partner cannot pay his or her part of the debts, the other partner or
partners must pay with their personal assets.
TRUE

8. Mutual agency means that any partner can legally bind the other partners and the partnership to
business contracts within the scope of the business regular operations
TRUE

9. In a general partnership, each partner has unlimited personal liability for the debts of the business.
TRUE

10. Capital contributions of the partners are shown in the statement of financial position.
FALSE

11. In a general partnership, each partner has limited personal liability for the debts of the business.
FALSE

12. A written partnership agreement is also known as the articles of partnership.

TRUE

13. The addition of a new partner to a firm does not dissolve the old partnership.
FALSE